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Wed 3 Dec 2008 12:07 AM

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Kurdish authorities stand by foreign oil contracts

Iraqi oil minister claims deals are 'illegal', but says export agreement reached.

The Kurdish Regional Government stands by contracts it has signed with foreign oil firms despite the Iraqi central government's insistence they are illegal, the Kurdish regional prime minister said on Tuesday.

Iraqi Oil Minister Hussain Al-Shahristani said on Friday the contracts were not recognised by the central government even though it and the Kurdish authorities had reached an initial landmark agreement to allow exports from Kurdistan to Turkey.

"Let Al-Shahristani say what he likes because all oil contracts signed by the Kurdistan Regional Government (KRG) are legal and constitutional," KRG Prime Minister Nechirvan Barzani told reporters in Arbil.

Under the initial agreement, exports of 100,000 barrels per day are expected to begin from the Tawke oilfield, where Norwegian oil firm DNO has a concession, at the beginning of next year.

Tawke is expected to be connected to Iraq's main northern export pipeline, which reaches the Turkish port of Ceyhan, by the end of this year.

A second Kurdistan oilfield, Taq Taq, is due to be linked to the pipeline three to four months later and combined exports should reach 250,000 barrels per day by the end of next year.

In addition to DNO, South Korea's SK Energy is part of a consortium developing the region's Bazian oilfield while Korea National Oil Corp has signed a separate $2.1 billion oil-for-infrastructure package with the KRG.

But the right to sign independent oil deals with foreign oil firms has been a sore point between the KRG and the central government. An oil ministry official, asked about Barzani's comments on Tuesday, said annulling the contracts was an essential condition before exports of crude from Kurdistan could go ahead.

"The Oil Ministry will not allow the Kurds to export crude as long as they still adhere to the Production Sharing Contracts," the oil ministry official said, asking not to be identified. (Reuters)

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